Real Estate Property in Agentina is it a safe investment?

Real Estate is a favorite subject among many Buenos Aires Expatriates and along with our good friend, Andrew of Buenos Aires Stay and Buenos Aires Tours & Sightseeing Blog, we are able to present the following article about where to invest in Argentina real estate for your convenience.

Recently, many real estate investors are looking harder at real estate property in Argentina for many good reasons.

Real estate property in Buenos Aires – recent history:

Between 2000 and 2010, property in our target segment of the real estate market in Buenos Aires appreciated 8.31% each year.

In 2009, at the height of the world recession the market was flat for around 8-9 months

Real estate price appreciation in Buenos Aires bounced back with latent vigour to record an average price increase of 10.2% from January 2010 to January 2011.

Real estate property is the Argentine people’s bricks-and-mortar-piggy-bank, their method of saving to beat inflation, avoiding banks and the possibility of a needy government seizing their hard earned cash.

It was only a few years ago that we found ourselves writing about the real estate market in Argentina, trying to dispel people’s misguided prejudice against one of the worlds most stable and orderly real estate markets. Their attitudes were an obvious response to Argentina’s massive default on sovereign debt, poor governments and weak institutions – those days are gone!

‘Those days are gone’ – no, that’s just a smidgen of hyperbole or maybe irony to emphasise our point – because Argentina’s problems may be far from over.

Albeit, while there is no denying Argentina still has some economic problems, the country´s economic fundamentals and its lack of debt are entirely positive when compared to some more mature economies.

If you are a frequent reader of our articles you will soon note that we do not to gloss over the problems in Argentina (an object that had colleagues puzzled), but provide facts. In this case demonstrate that in recent history the real estate market in Buenos Aires, even with Argentina’s many problems, has proven orderly, robust and low risk.

More to the point, no country or business sector is immune from the very scary prospect of the double dip. Today, Argentina finds itself in increasingly good shape when compared to other world economies. In addition, looking back to 2001/2, old Argentina would have found itself in the best of company today, especially when you cut through the BS and count the number of countries that are technically bankrupt.

Tell it how you like, but Greece is ‘under administration’ by the European Union and private lenders are currently being shafted. Italy, Spain, Portugal and Ireland – shall I go on – will expect similar treatment. The ‘carrot and stick’ approach to bankers, looks to me something like ‘take a very public haircut on debt (for our sakes) and we will give you more taxpayers money through the back-door’ – more of the same in my opinion, the Common Market had proven adept at stealing British taxpayers’ money for years.

The world is a very risky place today and real estate in Argentina (always low risk in our opinion) looks even healthier when compared to the real estate markets in Europe and United States of America.

Think what you like, even with weak governments and poor institutions Argentina is the third largest economy and one of the key emerging economies in this region.

Land and real estate prices can go only one way in the long-term and that is up – both population growth, population movement into the main conurbations, and our need to feed people at home and abroad equals growth in certain regions of Argentina.

The facts speak for themselves. Consider the high rates of real estate property appreciation noted at the start of my article against the backdrop of one of the most spectacular economic crashes in history, staggering currency devaluation, civil disobedience, and professionals eating in soup kitchens during 2001/2 and followed by the current world economic problems.

Expensive credit does not fuel the market and nor does outlandish lending. There is no bubble because in the main there are no mortgages, Argentines transact property in cash and that makes for an orderly market.

You buy and sell property in dollars in Argentina, which at least protects property from the unstable peso.

Argentines, like anyone these days, dig deep to get on the property ladder, when you fund a property purchase with hard cash you almost never sell short.

Real estate property in Buenos Aires

Property investment specifically in Buenos Aires City offers investors respectable returns of between around 7-8% per annum net. Choosing the right geography and the right type of property is very important if you want to turn your property investment into a cash making business. Be sure to come back next week when we will present our Real Estate Prices Buenos Aires 2012 guide.